Non compete Clause

In many employment contracts, the employer will insist on the need for restrictive covenants, these may include non dealing and non compete clauses. These generally play a greater role post termination.

Very briefly, these breakdown as below:

•    non-competition covenants – restricts the employee from working in similar employment for a competitor;

•    non-solicitation covenants – prevents poaching of clients/customers/suppliers;

•    non-dealing covenants – prevents a former employee from dealing with former clients/customers/suppliers, regardless of who approached who;

•    non-poaching covenants –prevents an employee poaching former colleagues.

In practice, these are enforceable if they are reasonable such as, how far away is the competitor? If it’s on your door step then this is likely to be more enforceable then a company of the same nature 100 miles away. 

The Government is currently asking for a call of evidence regarding the non compete clause. At the moment, the clauses are only enforceable in a court of law if the clause protects a legitimate interest and is reasonable. But, there is suggestions that they can cause issues with the hiring of new employees. Therefore, the government is asking for views from individuals and employers on whether this is the case.

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Authors: Roxanne Bradley

Published: 11 May 2016


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